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New York Cabs Gouged Riders Out of Millions

About 3,000 New York City taxi drivers routinely overcharged riders over two years by surreptitiously fixing their meters to charge rates that would normally apply only to trips outside the five boroughs, according to the city’s Taxi and Limousine Commission.

The drivers’ scheme, the commission said, involved 1.8 million rides and cost passengers an average of $4 to $5 extra per trip. The drivers, officials said, flipped switches on their meters that kicked in the higher rates, costing New York City riders a total of $8.3 million.

The 1.8 million fares represent a tiny fraction of a total 360 million trips over the 26-month period in question.

Agency officials said, however, that they were alarmed enough that they immediately ordered the companies that manufacture the meters to create a system to alert riders when the higher rates are being charged.

That is likely to be done through the digital screens facing the back seats of the cabs.

The commission said it began an inquiry after investigators, responding to a rider’s complaint, determined that a cab driver from Brooklyn, Wasim Khalid Cheema, had overcharged 574 passengers in just one month last year. Mr. Cheema’s license has been revoked. He could not be reached for comment.

The commission then used GPS data, collected in every cab, to review millions of trips in New York City and found a huge number in which the out-of-city rates had improperly been charged, officials said.

The investigators determined that 36,000 drivers improperly activated the higher rate at least once, and that about 3,000 drivers did it more than 100 times.

The higher rate, reserved for rides in Nassau and Westchester Counties, is 80 cents per one-fifth of a mile — twice the rate charged for rides in the five boroughs.

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Cabs on the Avenue of the Americas in Manhattan.Credit
Patrick Andrade for The New York Times

As described by officials, the fraud might rank as the biggest in the taxi industry’s history.

“We have not seen anything quite this pervasive,” said Matthew W. Daus, the taxi and limousine commissioner. “It’s very disturbing.”

The commission has turned over its probe to the city’s Department of Investigation.

“Some of these people could face serious charges,” Mayor Michael R. Bloomberg said Friday.

Applying the higher rate in New York City violates the commission’s rules. The penalty for it varies, from a fine of $200 to the mandatory revocation of a cab license, depending on how much was overcharged.

The taxi industry vigorously challenged the city’s findings, saying it was unimaginable that such a pervasive problem could be the result of deliberate fraud. The city said that 35,558 out of the city’s roughly 48,000 drivers had applied the higher rate.

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“For this to be so widespread — nearly every single driver — makes no sense,” she added.

The taxi commission refused to comment on the alliance’s claim, citing its continuing investigation. “We have to sort through the numbers,” Mr. Daus said.

In interviews on Friday, taxi drivers expressed dismay at the city’s findings, which they said threatened to tarnish the image of their industry.

“We are ashamed,” said Bagicha Singh, of Floral Park, Queens, who was on East Houston Street on break from his shift. “People will look at us as a thief.”

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The Taxi and Limousine Commission directed meter manufacturers to modify the equipment, to warn riders when the rate rises.Credit
Ángel Franco/The New York Times

Several cabbies defended themselves and their colleagues and said it was easy to accidentally activate the higher rate because of the way the meters were designed.

On some models, they said, the buttons for the New York City and out-of-town rates are extremely close together.

“You’re driving, your fingers are small, the buttons are tiny,” said Rana Singh, 38, of Maywood, N.J. “You look up at traffic; you look at the car ahead.”

Cab drivers are supposed to charge the higher rate only when they cross the border between New York City and Nassau or Westchester.

But according to the taxi commission, drivers often pressed a button on the meter that categorized the fare as Code No. 4, which is charged for trips outside the city, rather than Code No. 1, for those in the city limits.

Currently, passengers can see which rate is being charged by looking at the meter, which displays a No. 1 or a No. 4 — something few riders are aware of. The rate is also printed on every taxi receipt.

The system demanded by the city would require an acknowledgment from the passenger that the higher rate is to be charged before the alert disappears from the digital screen, the commission said.

Eventually, officials said, the changes would remove the ability of drivers to manually activate the higher rate, by creating a GPS-based mechanism that automatically charged it based on the location of the cab.

“We will make sure that this problem comes to an end,” Mr. Daus said.

C. J. Hughes contributed reporting.

A version of this article appears in print on March 13, 2010, on Page A1 of the New York edition with the headline: CABBIES GOUGED OVER $8 MILLION FROM PASSENGERS. Order Reprints|Today's Paper|Subscribe